Private equity (PE) is stock in a private company that does not offer stock to the general public. In the field of finance, private equity is offered instead to specialized investment funds and limited partnerships that take an active role in the management and structuring of the companies. In casual usage, "private equity" can refer to these investment firms, rather than the companies in which that they invest.
Private-equity capital is invested into a target company either by an investment management company (private equity firm), a venture capital fund, or an angel investor; each category of investor has specific financial goals, management preferences, and investment strategies for profiting from their investments. Private equity provides working capital to the target company to finance the expansion of the company with the development of new products and services, restructuring of operations, management, and formal control and ownership of the company.
As a financial product, the private-equity fund is a type of private capital for financing a long-term investment strategy in an illiquid business enterprise. Private equity fund investing has been described by the financial press as the superficial rebranding of investment management companies who specialized in the leveraged buyout of financially weak companies.
Evaluations of the returns of private equity are mixed: some find that it outperforms public equity, but others find otherwise.
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